INVESTORS SPEAK: We don’t trust audit committees’ reports

False reports and errors in financial statements are global problem and they contributed to the global melt down of the capital market. That is why the International Financial Reporting Standards (IFRS) was initiated to stem the tide of such negative reports in the system.

Presently, we cannot trust the reports of audit committees, and unless they comply with this reporting standard, we can hardly trust them. If they comply, things will surely go well but if they continue with the trend with which they are operating presently, then nothing will change.

We are very pessimistic for now about the change in their mode of operation, but we believe things will change for better if only they will adopt the global best practices and the newly initiated IFRS formats. The case of false financial reporting by audit committees is very rampant in the Nigeria. I cannot mention the number of times audit committees have miss-informed shareholders.

Also, the regulatory authorities are not helping matters because they sometimes sacrifice best practices for monetary benefits putting the ordinary shareholders in a hopeless situation; though they suppose to be the last hope of minority shareholders.

Even if you conduct your own research, how far can you go, how will you change the strongly entrenched error in the system? It’s hard to treat, even if you see the errors in the reports, what will you do? That’s the issue. But for now we have some good companies that give good reports. Some financial institutions like Zenith Bank, Sterling Bank are giving good reports and in the case of Sterling Bank, though they are not doing well enough, they still give good reports and financial statements.

That is why you as a shareholder need to get yourself acquainted with investment news and get the information as at when due. Go to the registrar and get the information. Do not depend on one source of information. It is said that two heads are better than one. If you get your information from a single source and conclude it there, then you are very wrong.

You are to get information from different sources and compare them to make the right decisions. Like me, I do not rely on such reports; I make my personal research so I don’t depend on only one source of information or report.

You should try to be convinced, don’t depend exactly on whatever you have been told. Just like I have gotten today’s report, I would now seat down and study, go to my stock broker and find out if it is really okay. The report of the audit committees, I need to look at it, I need to study it. I don’t depend on them.

Mr. Lotun

Fortunately, I don’t have shares in any company that issues false report. For all the companies that I have bought shares from, in my judgment the audit committees have always given me, together with other shareholders, the accurate information about the financial status of the companies.

I must be plain to tell you that I do not have time to be going out in search of information, to check whether the reports of the audit committees are true or not. I think I have never gotten any false report or bad shares except for those banks that were liquidated in the past.

Beside those banks I do not think I have experienced the problem of liquidation with any of the companies where I have shares. I have been investing in shares for the past 30 years, but the fact remains that I can only say something about my shares, I do not know what the experience of other shareholders have been.